A new approach to solving cities’ systemic problems

Mastercard has a vision for transforming how cities and the private sector work together.

As urbanization accelerates, the global urban infrastructure will experience a demand it is not equipped to handle. By 2050, two-thirds of the world’s population is expected to live in cities, according to the United Nations Population Division. On a practical level, that entails a higher demand for health services, for involvement in the labor market, for housing, and for a range of other vital necessities.

“The urbanization trend dominating the 21st Century should be good news,”writesJoan Clos, executive director and under secretary general for UN-Habitat, but “we can see that current urbanization patterns are largely unsustainable—socially, economically, and environmentally.”

Today’s urban leaders face a host of challenges: diminishing environmental resources, increasing income inequality, shrinking budgets, and dramatic shifts in how people participate in the workforce. How can cities adequately respond to today’s challenges—and perhaps more importantly, tomorrow’s challenges?

Solutions to urban problems need to evolve in tandem with cities

Partnerships between the public and private sector have long been championed as potential solutions to the deep-rooted and systemic problems facing cities. However, public-private partnerships operating in smart cities all too often force problem-solving partners to operate in silos, producing solutions that lack interoperability and sustainable business models for future use.

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Under many of the previous partnerships, stakeholders who are working on solutions often aren’t in conversation with one another, resulting in a patchwork of half-measures happening out of sync. Worse yet, key voices are sometimes excluded from the decision-making process altogether.

Many public-private partnerships operate on unsustainable or harmful business arrangements—a problem for cities already chafing under the weight of growing debt and shrinking budgets. Moreover, City officials often get tied down managing multiple vendors, and they worry about getting locked into one vendor for long-term operations of a solution.

Cities also lack a clear and cost-effective mechanism for implementing new solutions, or scaling them after they’ve been developed. In one case, the city of Philadelphia partnered with a vendor to create a Digital On-Ramp: an app with the ambitious mandate to train 500,000 marginalized residents. The skills needed in a smart city however, didn’t actually align with the skills needed in Philadelphia.

“Rather than dealing with the qualitatively different problem of widespread post-industrial economic decline, inner city marginalization, and a lack of economic opportunities for hundreds of thousands of city residents, the smart city discourse reduced Philadelphia’s recent past into one problem with a straightforward solution: online workforce education through a mobile application,” writes Alan Wiig, an assistant professor of community development at the University of Massachusetts Boston, in a report on Philadelphia’s efforts. “A workforce education application could never, on its own, provide pathways for jobs for the 500,000 the Mayor claimed were in need of new skills.”

This lack of clarity in implementation is endemic to current urban problem-solving. According to one McKinsey report, city leaders in Europe were frequently frustrated by vendors attempting to apply solutions developed in megacities to smaller European cities with fewer than half a million residents. As a result, “city officials believe the industry does not understand them, and technology vendors think dealing with cities is too complicated,” write the report’s authors. This unintegrated approach also results in ad hoc implementation of products and services on a case-by-case basis.

Putting people first is paramount

Today’s problems call for a more holistic approach to problem solving that puts people at the center of innovations.

“Cities may be getting smarter, but they haven’t noticeably changed from a user perspective,” writes Colin O’Donnell, the chief innovation and strategy officer for Intersection, the team leading New York City’s internet expansion, LinkNYC. “It seems like most of the digital advances in cities have been invisible and focused on city operations, rather than on the parts of the city that people can see, touch, and use.”

Many forward-thinking organizations are already beginning to tackle these problems by prioritizing people. In Philadelphia, for example, the government teamed up with Knight and William Penn Foundations to repurpose vacant buildings as civic centers. In Boston’s Chinatown neighborhood, younger residents can get involved in real urban planning through a videogame called “Participatory Chinatown.”

However, few solutions are comprehensive enough to address the global parameters of today’s urban challenges. Mastercard, a technology company in the global payments industry, has unique expertise developing these kinds of holistic solutions.

The Mastercard Center for Inclusive Growth is following a four-step process—pilot, learn and validate, iterate, and scale—to develop solutions that help modernize Mexico’s retail sector, which employs a quarter of Mexico’s workers. The project began with a partnership with FUNDES, a social enterprise focused on Latin American small- to medium-size businesses and INADEM, a Mexican government agency that focuses on developing the microenterprise sector. Working together, Mastercard and its partners outfitted a pilot group of 7,600 entrepreneurs with new technology and business training, resulting in an increase in sales for the vast majority of the participating businesses.

Next steps include validating the results through academic research and further iteration with the goal of scaling the impact of the intervention. This model, which engages a range of stakeholders and ensures that strategies and insights are studied, shared, and replicated, offers an impactful and inclusive vision for tackling the future of city problems.

Now, Mastercard hopes to leverage this holistic approach against the biggest problems facing cities around the world.

Building a healthy urban ecosystem for people, cities and businesses

The City Possible platform is Mastercard’s vision of a new private-public partnership model that blazes a path for co-developing, piloting, and scaling solutions throughout global city systems. By transforming how cities and their partners take on urban challenges, City Possible can help create a stronger urban ecosystem.

City Possible builds on the idea that multiple innovative companies must co-develop solutions to the biggest urban challenges of the 21st century. No one company or one city can tackle the biggest problems alone. To that end, one of the core components of the City Possible platform is a think tank which brings together forward-thinking mayors, executives, civic leaders, and academics working to create the blueprint for the future of cities. This group will help establish City Possible as a thought leader in the arena of urban solutions by sharing strategies and insights grounded in real experience and city leadership expertise.

In the early 2000s, for example, Seoul decided to replace a three-lane highway that ran over the city’s Cheonggyecheon River with a pedestrian walking path. A collaboration between citizens, an ambitious, infrastructure-minded city administration, an array of academic experts, and the private sector worked together to bring the project to fruition. When the redevelopment was completed, temperatures in the area dropped three degrees below the city average, the number of working people in that area of the city increased, public transportation use increased, and, subsequently, traffic lightened. Seoul’s solution—empowered by its diverse group of partners—ended up benefitting the city, local businesses, the environment, and individual workers, citizens, and residents.

City Possible invites multiple companies that can function at scale to work together to solve problems in collaboration with cities and other stakeholders. Depending on any one vendor for a long term solution entails serious risks. Consider, for example, the second pilot of a financial inclusion program, which aimed to construct a platform to bridge the gap between government and financial services and Mexico’s poor. The program almost fell apart when the primary vendor—a distribution network that provides basic goods to community stores in rural Mexico—lost its CEO. The project proceeded only because the new CEO’s priorities matched those of the partnership. The City Possible initiative grants cities and their partners the flexibility to adapt as the facts on the ground change. This multi-party approach also ensures that cities and their partners have access to a wide range of solutions, valuable information and expertise, and useful standards for maximizing efficiency.

The next step of the City Possible model enables its partners to pilot solutions in labs set up around the world in a range of individual cities. Working out of five regional labs, stakeholders will build, test, and pilot products that solve critical urban challenges. “Staffers in smaller cities often assume or claim that certain types of projects are out of reach, writes Rachel Burstein of the New America Foundation. “It derives from the impression that solutions that Philadelphia, Boston, San Francisco or Chicago are pursuing are inaccessible to smaller, less well-resourced cities.” This kind of thinking is anathema to City Possible’s approach. Once a solution has been piloted, learnings from that effort can be extracted and used for future projects elsewhere. Allowing cities to build off each other’s solutions saves critical time, energy, money, and resources that can subsequently be funneled into other projects.

One model for City Possible’s regional labs is City Tech, a hub for smart city research and engineering focused on Chicago’s urban problem—with an eye to export solutions elsewhere once they have been tested. City Tech works with the city and private partners such as Microsoft to advance projects that no one stakeholder could have undertaken independently. This kind of thinking, expanded to a global scale, is one of the inspirations for City Possible’s pilot-testing labs.

Cities gain additional benefits from joining the City Possible model. Bringing together a wide range of stakeholders provides cities with an arsenal of additional smart tools and services through which they can digitally engage with citizens and deliver personalized services. Modernization brought about by City Possible enables local governments to extract greater insights on the inner workings of their cities in order to run the city more efficiently. These benefits reach cities once solutions developed in City Possible’s labs are scaled and applied to other cities.

This is the kind of forward-thinking optimism that fuels City Possible. A model that prioritizes mutual investment, and working in tandem on scalable solutions will lead to creative and sustainable revenue models. As a result of this unique partnership, revenue can be both reinvested into future city transformations, and benefit corporate partners.

Forward-looking partners and forward-looking cities

One-to-one solutions are no longer sufficient to solve global urban problems. Cities, private enterprise, and citizens can no longer afford to go it alone—for a smart, responsive city to succeed, collaboration is essential. These are the tenets of the City Possible movement.

A future that reflects the values of the City Possible model would see improvements across a number of strata: housing, transportation, infrastructure, income inequality, among many others. “A future-proof city must benefit the many, not just the few. It is about building bullet trains and basic toilets.” says Hany Fam, EVP Enterprise Partnerships of Mastercard.

Cities are poised on the brink of these coming tectonic shifts. Civic leaders, businesses and citizens can continue to navigate the tangle of urban problems inefficiently—stuck in silos, lacking consistent standards, and under the yoke of unsustainable business models. Or, they can stand arm-in-arm, ready to build better cities for everyone. The City Possible platform—a partnership initiative that sets out to bring transformative change to the world’s cities—welcomes everyone.

Together we can make cities more connected and inclusive.

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